‘Free’ stadium ignores economic realities

A new waterfront stadium has plenty of cheerleaders in Auckland, who are urging the council to just bite the bullet and get on with it - especially as it's being pushed as 'cost-neutral' to the ratepayer. But the economics of swapping a car park for a stadium on Auckland’s waterfront don't add up.

It’s entirely up to the Auckland Council if it wants to move its money-spinning, dividend-paying, economic driver from prime waterfront land and build what’s likely to be a loss-making but iconic stadium there instead. On the surface it's a tempting deal - swap Eden Park for an international showcase sunk into the sea at Bledisloe Wharf. But the big sticking point is the Ports of Auckland.

This month POAL reported a 27 percent lift in net profit to $76.8 million. Volumes and revenue were also up. It paid Auckland Council a dividend of $51.1m, about the same as it did last year. Earlier this year the council endorsed the port's 30-year master plan which looks at how it will cope with the city's rapid growth. It has 700 employees and port-related industries in Auckland keep an estimated 160,000 people in work.

The Port has no say in whether it stays or goes, but when a serious spotlight was cast on the idea it commissioned a comprehensive report from NZIER on the future of New Zealand’s vehicle supply chain, and POAL’s role in that. The only change since its release in May 2017 has been that the numbers have continued to climb.

The figures were staggering enough to kill off the plan there and then – if figures were the sole consideration.

New Zealand would face a net loss of $943 million if Auckland’s car trade was to be diverted to Northport, or a net loss of $1.05 billion if it went to the Port of Tauranga.

NZIER framed the question in the context of the best use of prime waterfront land – rather than frequently-cited alternatives such as a stadium or shops, restaurants or entertainment venues.

It said its figures were conservative. But fundamentally, it is “inherently efficient” to have vehicles land in the same city as they will be bought.

Cars spill off at Bledisloe, Captain Cook and Marsden Wharves in increasing numbers – nearly 300,000 a year. At the moment the yard space devoted to cars is congested for five to six days every month, with cars sitting there for an average of three days before they are moved off. Peak congestion is forecast to perhaps double in the next five to 10 years. It’s likely to get so bad that at times there will be nowhere to park the bigger cruise ships coming in. (POAL wants to build a vehicle terminal to store cars more efficiently, which would also hide some of them from public view.)

"These ideas are great, but they're from people who don't know where their lunch comes from."

Moving to Northport or Tauranga however will mean substantially increased cartage costs as most of those cars remain in Auckland once they are off-loaded. (Auckland makes up 37 percent of national demand for light vehicles and neighbour Waikato makes up 9 percent.) It also means clogging the route to either Whangarei or Mt Maunganui with car transporters (with the increase in vehicle emissions and crashes that goes with that), or investing vast amounts in rail to move them. Rail is not an easy fix – double tracking, upgrading and building lines, and a storage depot at the end of the line will be required. Transporters will still have to be used to complete deliveries. Car buyers will bear the brunt of increased costs, at an estimated $259 per car. The NZIER report says “There is no realistic prospect of the rail investment required to make either option commercially viable for the transport of vehicles in the short to medium term.”

To move the POAL to Northport would require two additional berths there and 18 hectares of yard space. The estimated increased cost of transporting cars back to Auckland is $81m from another 18.5 million kilometres travelled, and another 150 or more trucks required. Ratepayers would also see reduced dividends from POAL. The NZIER report also estimates additional crashes causing a fatality and 10 injuries every two years. Environmentally, we’re looking at releasing an extra 13,300 tonnes of CO2 a year. In total – you would need to see nearly a billion dollars' worth of benefits in using the port land for something else, to offset the costs.

The costs of moving to Tauranga are higher.

The report didn’t look at moving the port to another part of Auckland – most suggested locations are not viable as shipping destinations. However, the cost of moving the port to a “superport” on the Manukau Harbour, or to the Firth of Thames, has been estimated at $4b - $5.5b.

POAL spokesman Matt Ball says Onehunga is no longer a usable port, so the only realistic nearby option would be to expand the existing port eastward. That would require about 15 hectares of seabed reclamation - problematic given the port's commitment to end reclamation in the Waitemata.

"These ideas are great, but they're from people who don't know where their lunch comes from," he says. "The cost of moving the port would come in somewhere between $10b and $30b - if there was a suitable site. No one has done the figures and it's a total guess but it wouldn't be less than $10b. And there is no site. The only logical plan is to move it out into the Hauraki Gulf east of Ponui Island to Clevedon. There just happen to be thousands of migratory birds in that area.

"The port feeds Auckland. It moves about a million containers a year and that's well up from last year. Trying to move it would be a major logistical task - Tauranga could not handle them, and there's no rail link to Northport."

Carr says while the stadium is a great idea, those behind it are "well out of touch".

"I think it's pie in the sky." Carr can't get around the concept that the people who say having the port on prime downtown property is ugly would be happy to have a building blocking the view.

He also says while other cities have moved their ports, it's either because their current facilities aren't big enough for new ships (London) or those places had other deep water harbours and available land nearby (Sydney, and Brisbane, which reclaimed land to construct a new port).

Industry insider Brian Stocking, the former CEO of Hapburg-Lloyd (NZ) Ltd and a logistics and transportation expert, has previously told Newsroom there is no realistic option when it comes to shifting operations from the Auckland waterfront.

Regardless, a government working group on instructions from Regional Development Minister Shane Jones is currently looking at options to move the Ports of Auckland, with a particular eye on Northport. It is due to report back by December this year.

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